Tacoma, Seattle Lead List of Strong Housing Markets

What’s the top place in the U.S. to buy a home over the next two years? That would be Tacoma, Wash., according to financial-data firm Fiserv.

Despite the gloomy picture for the national economy and housing market, residents of that city, on Washington’s Puget Sound, are in for a 25% increase in home prices by spring 2013, according to a report released Tuesday by Fiserv Inc. Another strong market is expected to be the Palm Bay and Melbourne area on Florida’s eastern coast (up 18%). Gains of about 10% are expected in Seattle, Tucson, Ariz. and Memphis.

David Stiff, Fiserv’s chief economist, says cities like Tacoma and Seattle have strong, diverse economies and should fare well over the next two years. Areas like Palm Bay-Melbourne, Tucson and Memphis were hammered by price declines but now are seeing strong interest from investors, Mr. Stiff notes. Fiserv, which published the report along with Moody’s Analytics, also compiled a list of poor performers.